FEDERAL COURT OF AUSTRALIA Burrows v The Ship 'Merlion' [2024] FCA 220 File number: QUD 437 of 2023 Judgment of: SARAH C DERRINGTON J Date of judgment: 13 March 2024 Catchwords: ADMIRALTY AND MARITIME JURISDICTION – jurisdiction in rem – application to strike out pleaded claims on the basis of which ship was arrested – whether claims arising under a trust, Barnes v Addy, a "sham", misleading or deceptive conduct, conversion, and detinue have legal character of proprietary maritime claims as defined by s 4(2)(a) of the Admiralty Act 1988 (Cth) – whether claims in rem and in personam impermissibly combined contrary to s 18 of the Admiralty Act ADMIRALTY AND MARITIME JURISDICTION – practice and procedure – conditional appearance – where claims asserted to be proprietary maritime claims within the meaning of s 4(2)(a) of the Admiralty Act 1988 (Cth) – application to strike out pleaded claims on the basis of which ship was arrested – where defendants entered conditional appearance to challenge jurisdiction – where defendants also brought application for summary judgment – effect of conditional appearance under r 23 of the Admiralty Rules 1988 (Cth) PRACTICE AND PROCEDURE – summary judgment on actions commenced in rem – claim that ship held on trust pursuant to terms of a "higgledy-piggledy" purchase and sale agreement – where deposit to be held on trust – where ship "traded-in" with value assigned to deposit, engine installation, and ex-factory payments – whether reasonable prospects of establishing the ship was a "deposit" – whether if trust established, there are reasonable prospects of establishing the first limb of Barnes v Addy, and claims in conversion and detinue – where alleged "sham" – nature of a "sham" – whether reasonable prospects of establishing elements of a "sham" Legislation: Admiralty Act 1988 (Cth) ss 3, 4, 9, 10, 11, 12, 13, 14, 16, 19 Competition and Consumer Act 2010 (Cth) Sch 2 Australian Consumer Law ss 18, 232 Federal Court of Australia Act 1976 (Cth) ss 31A, 37M, 37N Admiralty Rules 1988 (Cth) rr 18, 23 Federal Court Rules 2011 (Cth) r 5.02, 16.21, 26.01 Property Law Act 1974 (Qld) s 228 Sale of Goods Act 1896 (Qld) s 24 Navigable Waters Regulations 1958 (WA) reg 45E Senior Courts Act 1981 (UK) s 20(2) Cases cited: ASIC v Cassimatis [2013] FCA 641 Baden Delvaux & Lecuit v Société Générale pour Favoriser le Développement du Commerce at de l'Industrie en France SA [1992] 4 All ER 161 Barnes v Addy (1874) LR 9 Ch App 244 Brybay Pty Ltd (in liq) v Esanda Finance Corp Ltd [2002] WASC 309 Bunnings Group Ltd v CHEP Australia Ltd [2011] NSWCA 342; 82 NSWLR 420 Caravelle Investments Pty Ltd v Martaban Ltd [1999] FCA 1505; 95 FCR 85 Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337 Consul Developments Pty Ltd v DPC Estates Pty Ltd (1975) 132 CLR 373 Elbe Shipping South Australia v The Ship "Global Peace" [2006] FCA 954 Electricity Generation Corporation v Woodside Energy Ltd [2014] HCA 7; 251 CLR 640 Farah Constructions v Say-Dee Pty Ltd (2007) 230 CLR 89 Gaba Formwork Contractors Pty Ltd v Turner Corporation Ltd (1991) 32 NSWLR 175 GEC Marconi Systems Pty Ltd v BHP Information Technology Pty Ltd [2003] FCA 50; 128 FCR 1 Grimaldi v Chameleon Mining NL (No 2) (2012) 200 FCR 296 Johnson Matthey (Aust) Ltd v Dascorp Pty Ltd [2003] VSC 291; 9 VR 171 Kowalski v MMAL Staff Superannuation Fund Pty Ltd (2009) 178 FCR 401 Kuwait Airways v Iraqi Airways [2002] 2 AC 883 Masters Home Improvement Pty Ltd v North East Solution Pty Ltd 372 ALR 440 Mathieson Nominees v Aero Developments [2016] VSC 131 Maynegrain Pty Ltd v Compafina Bank [1984] 1 NSWLR 258 Mount Bruce Mining v Wright Prospecting Pty Ltd [2015] HCA 37; 256 CLR 104 Owners of the Motor Vessel 'Iran Amanat' v KMP Coastal Oil Pte Ltd [1999] HCA 11; 196 CLR 130 Owners of the Ship "Shin Kobe Maru" v Empire Shipping Company Inc (1994) 181 CLR 404 Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451 Polar Aviation Pty Ltd v Civil Aviation Safety Authority (No 4) (2011) 203 FCR 293 Prior v South West Aboriginal Land and Sea Council Aboriginal Corporation [2020] FCA 808 Sharrment Pty Ltd v Official Trustee in Bankruptcy (1988) 18 FCR 449 Ship "Sam Hawk" v Reiter Petroleum Inc [2016] FCAFC 26; 246 FCR 337 Sino Iron Pty Ltd v Worldwide Wagering Pety Ltd [2017] VSC 101; 52 VR 664 Snook v London & West Riding Investments Ltd [1967] 2 QB 786 Spencer v Commonwealth (2010) 241 CLR 118 The Bell Group (in liq) v Westpac Banking Corporation (No 9) (2008) 39 WAR 1 The Hoop (1801) 4 C Robb 145 Theseus Exploration NL v Foyster (1972) 126 CLR 507 ThoughtWare Australia Pty Limited v IonMy Pty Ltd [2023] FCA 906 Volvo Finance Australia Pty Ltd v Waterfront Enterprises Pty Ltd (In Liq) (No 2) [2020] NSWSC 262 West Australian Newspapers Ltd v Bond [2009] WASCA 127; 40 WAR 164 Wilmington Trust Co (Trustee) v The Ship "Houston" [2016] FCA 1349 Zetta Jet Pte Ltd v The Ship "Dragon Pearl" [2018] FCAFC 99 Division: General Division Registry: Queensland National Practice Area: Admiralty and Maritime Number of paragraphs: 137 Date of hearing: 15 December 2023 Counsel for the Plaintiff Mr John Hyde Page Solicitor for the Plaintiff Sewell & Kettle Counsel for the Defendants Mr Edward Cox SC and Mr Charles Street Solicitor for the Defendants Keypoint Law ORDERS QUD 437 of 2023 BETWEEN: TERENCE ROY BURROWS Plaintiff AND: GLENN THURLOW First Defendant THE SHIP "MERLION" Second Defendant order made by: SARAH C DERRINGTON J DATE OF ORDER: 13 MARCH 2024 THE COURT ORDERS THAT: 1. Paragraph [90](i) of the Amended Statement of Claim filed on 6 December 2023 be struck out. 2. The action in personam against the named defendant, Glenn Leslie Thurlow, as pleaded in paragraphs [73] – [89] and [90] (v) and (viii) of the Amended Statement of Claim filed on 6 December 2023 be struck out. 3. The action in rem pleaded in paragraphs [63] and [64](iii)C, (iii)D, and (iii)E be summarily dismissed. 4. The interlocutory application filed on 28 November 2023 be otherwise dismissed. 5. The parties have liberty to apply within 7 days of the date of these Orders. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. REASONS FOR JUDGMENT SARAH C DERRINGTON INTRODUCTION 1 By writ dated 11 October 2023, the plaintiff, Mr Terence Burrows, purported to commence proceedings in rem against the ship, The Merlion, registration number 'GX 369'. The writ named Mr Glenn Thurlow as a "relevant person" within the meaning of s 3 of the Admiralty Act 1988 (Cth). On 23 October 2023, The Merlion was arrested by the Admiralty Marshal of the Federal Court of Australia, pursuant to an arrest warrant taken out by Mr Burrows on 13 October 2023, in support of his claims for the following relief: (a) a declaration that he is the sole beneficial owner of The Merlion; (b) an injunction requiring Mr Thurlow to give possession of, or alternatively transfer title to, The Merlion pursuant to s 232 of the Australian Consumer Law (ACL) (schedule 2 to the Competition and Consumer Act 2010 (Cth)) or the Federal Court of Australia Act 1976 (Cth) (FCA Act); and (c) damages for conversion, in detinue, and under the ACL. 2 As at the date of this judgment, The Merlion remains under arrest. 3 At one level, Mr Burrows' claim is very straightforward. He says he is still the owner of The Merlion, which he had hoped to trade-in for a new vessel which was to be built for him by Pacific Motor Yachts Pty Ltd (PMY) pursuant to a contract titled 'Offer to Purchase and Sales Agreement'. After receiving possession of The Merlion pursuant to the Agreement, PMY went into liquidation. Mr Burrows terminated the Agreement. The sole director of PMY, Mr Brett Thurley, subsequently purported, apparently on his own behalf, to transfer ownership in The Merlion to Mr Thurlow, who had kept The Merlion moored at his private jetty from about the beginning of September 2023 until her arrest. Mr Burrows simply wants The Merlion returned to him. 4 At another level, however, the route Mr Burrows has taken to reclaim The Merlion is anything but straightforward. On 6 December 2023, he filed an amended statement of claim (ASOC). In his written submissions, Counsel for Mr Burrows identified five claims that were said to be articulated in the ASOC, all of which he contended to be proprietary maritime claims within the meaning of s 4(2) of the Admiralty Act. Senior Counsel for Mr Thurlow said there were six. The ASOC contains allegations that The Merlion is held variously on an express trust, a bare trust, a constructive trust, a resulting trust, or by bailment. There is a claim for knowing receipt. There is a claim under s 228 of the Property Law Act 1974 (Qld) (PLA) and a claim that the creation of certain documents was a sham. There are claims in conversion and detinue. There is the inevitable plea of misleading or deceptive conduct and of being knowingly concerned in that conduct. Damages, declarations and injunctions are sought, including, rather unorthodoxly, against the Admiralty Marshal to provide possession of The Merlion to the arresting party. 5 I have discerned five substantive causes of action within the ASOC. 1. that The Merlion was held on trust for Mr Burrows by Mr Brett Thurley or by PMY, and that – accordingly – the transfer of The Merlion to Mr Thurlow was done in knowing breach of trust, pursuant to Barnes v Addy (1874) LR 9 Ch App 244; 2. that the transfer documents executed in July 2023 were a sham such that Mr Burrows is entitled to a declaration that he is and was at all times the legal and beneficial owner of The Merlion; 3. that any transfer of ownership to Mr Thurley, and then from Mr Thurley to Mr Thurlow, if effective, should be set aside under s 228 of the PLA; 4. that PMY and Mr Thurley made a number of misleading or deceptive representations in breach of s 18 of the ACL, and Mr Thurlow was a knowing participant in those breaches; and 5. that Mr Burrows has a right to immediate possession of The Merlion from Mr Thurlow in conversion or detinue. 6 Mr Thurlow filed a conditional appearance on 3 November 2023 for the sole purpose of contesting jurisdiction. I interpolate that although it is no longer possible to file a conditional appearance under the Federal Court Rules 2011 (Cth) (because the Rules now provide instead for a Notice of an Address for Service (r 5.02)), r 23 of the Admiralty Rules 1988 (Cth) preserves the traditional requirement to enter an appearance, which may be conditional. 7 By his interlocutory application filed on 28 November 2023, Mr Thurlow seeks orders which can be separated into two categories. First, Mr Thurlow challenges the nature of Mr Burrows' claims and contends that, not being proprietary maritime claims, they do not fall within the Admiralty jurisdiction of this Court, and so should be struck out. Even if those claims are within jurisdiction, Mr Thurlow seeks an order for summary dismissal of the proceedings pursuant to s 31A(2) of the FCA Act, and that the arrest of The Merlion be set aside. Second, Mr Thurlow seeks an order that Mr Burrows' pleading be struck out, on the basis that it impermissibly merges an in rem and an in personam action, contrary to r 18 of the Admiralty Rules. Ordinarily, the filing of an application for summary judgment, in addition to objecting to jurisdiction, goes beyond a mere objection and would be taken to amount to a waiver of any objection to jurisdiction. In the circumstances of this case, however, where the Admiralty Act under s 14 provides that "a proceeding shall not be commenced as an action in rem against a ship …except as provided by this Act", the Court must resolve the question of jurisdiction notwithstanding. BACKGROUND Purchase of The Merlion 8 PMY is a corporation whose business is the sale of motor yachts and arranging for their construction. On or about 30 March 2022, Mr Burrows (as buyer) entered into a contract with PMY (as seller) for the construction of The Merlion, a 2023 Clipper Hudson Bay 540 Sedan. The Merlion was constructed in accordance with the terms of that contract, and Mr Burrows took delivery of her on or about 14 or 15 December 2022. The Merlion was registered in Western Australia under Mr Burrows' name. A Boat Registration Certificate was issued by the Department of Transport in Western Australia (DOTWA), which registered The Merlion under registration number 'GX 369'. Construction and sale of a new vessel 9 Between March and May 2023, Mr Burrows entered into negotiations with representatives of PMY for the construction of a new vessel, a 2024 Clipper Hudson Bay 540-S01 (the New Vessel). On 4 May 2023, Mr Burrows participated in a video conference with Mr Thurley and Mr Peter Foster, an employee of an associated entity of PMY, to discuss the terms of a contract for the construction of the New Vessel. 10 A contract document dated 2 June 2023 was prepared by PMY that set out the terms of the construction and sale of the New Vessel, titled 'Offer to Purchase and Sales Agreement', which is exhibited to the Affidavit of Glenn Leslie Thurlow filed 14 December 2023 (Thurlow Affidavit). It was signed by Mr Burrows on 9 June 2023, who then provided a copy of the executed Agreement to Mr Thurley. The Agreement was signed on behalf of PMY, apparently by Mr Thurley, on 10 June 2023. 11 The Agreement comprised a set of standard form sale and purchase conditions. The bespoke details of the transaction were entered onto a reference schedule (Reference Schedule). 12 In substance, the Agreement contemplated that Mr Burrows would trade-in The Merlion and pay an additional cash amount in exchange for PMY to arrange for construction and delivery of the New Vessel in accordance with the specifications, as initialled by both parties to the Agreement, attached to the standard terms. 13 On or about 6 July 2023, Mr Thurley and Mr Burrows executed two versions of a document titled "Recreational Boat Transfer Forms – Notification of change of ownership", one being a Purchaser's Copy and the other being a Seller's Copy (Transfer Documents). This purported to transfer the registration of The Merlion from Mr Burrows to PMY, as required by reg 45E of the Navigable Waters Regulations 1958 (WA). Mr Thurley was named purchaser of The Merlion, not PMY. 14 The following day, on 7 July 2023, Mr Burrows provided Mr Thurley with physical possession of The Merlion. Between 7 July 2023 and August 2023, The Merlion was moored at the former business address of PMY, being 199 Beattie Road, Coomera, Queensland 4209. As at the date of filing of the ASOC, the New Vessel had not been delivered to Mr Burrows. Insolvency of PMY and transfer of The Merlion 15 On 29 August 2023, PMY, in addition to three related corporate entities, being Cobalt of Australia Pty Ltd, Bennington Boats of Australia and Thurley Marine Pty Ltd (the Related Entities), entered voluntary administration. Two administrators were appointed. 16 Between 30 August 2023 and 3 September 2023, The Merlion was moved from the business address of PMY to a private jetty at Mr Thurlow's residence. 17 In the Affidavit of Terence Roy Burrows dated 13 December 2023 (Third Burrows Affidavit), Mr Burrows deposes to a conversation between himself and Mr Thurley on 4 September 2023, in which Mr Thurley is alleged to have said "… that boat is certainly a Pacific Motor asset not mine" (emphasis added). 18 In that same affidavit, Mr Burrows deposes to his attempts to recover physical possession of The Merlion. He deposes to a telephone conversation with an associate of one of the appointed voluntary administrators of PMY on 5 September 2023, during which he was allegedly told "[u]nfortunately I've just found out that your boat is no longer on the asset register and Brett Thurley has given the boat to Glenn Thurlow". 19 Exhibited to the Thurlow Affidavit is a document dated 25 July 2023 titled "Transfer of HB580 – HIN: AuCCRHB542H423 – to Glenn Thurlow" (Transfer of HB580). It states: This document is a record of the transfer of the ownership of the Clipper HB580 with HIN: AuCCRHB542H423 to Glenn Thurlow from Brett Thurley. The transfer of ownership of this motor yacht is in lieu of money owed to Glenn Thurlow and his entities, which is detailed on the attached Boat Summary dated 31/1/23. It is also noted that the attached boat summary has had three transactions not reflected in the total list. [The three transactions are described.] Finally, it is also agreed that Brett Thurley will actively try to sell the HB580 and 100% of the funds recovered will be paid to Glenn Thurlow or otherwise directed to an entity of his choice. [The document was signed by both Mr Thurlow and Mr Thurley]. 20 It is not contested that the Clipper HB580 referred to in the document is The Merlion. 21 On 25 September 2023, the appointed administrators released a Report to Creditors (Report), which contained findings about the management and financial circumstances of PMY and the Related Entities. The Report provided, inter alia, that: (a) PMY had been insolvent since at least 30 June 2022; (b) prior to PMY entering administration, customers of PMY were instructed to make payments into the bank account of a separate company, Clipper Yachts Australia Pty Ltd, which is the trustee of the Thurley & Thurlow Unit Trust; and (c) the administrators estimated that creditors of PMY would recover between NIL and $0.06 on the dollar. 22 PMY went into liquidation on 3 October 2023. 23 On 8 October 2023, Mr Burrows sent an email to the liquidators of PMY, stating that he was terminating the Agreement. The grounds of termination were stated to be anticipatory breach because of PMY's inability to deliver the New Vessel, breach of the warranties in cl 13.1 of the Agreement relating to the solvency of PMY, and misleading and deceptive conduct by and on behalf of PMY. 24 The New Vessel is presently in a state of semi-completion in the People's Republic of China. It does not appear that PMY is able to complete its construction. The administrators appointed to PMY have disclaimed the Agreement. ARE THE CLAIMS WITHIN JURISDICTION? 25 Mr Burrows asserts Admiralty jurisdiction on the basis that each of his claims are a proprietary maritime claim concerning a ship that founds an action in rem pursuant to s 16 of the Admiralty Act. There are different principles which deal with such a challenge to jurisdiction, and applications for summary dismissal. As the Full Court put it in Ship "Sam Hawk" v Reiter Petroleum Inc [2016] FCAFC 26; 246 FCR 337 at [243], "[a] challenge to jurisdiction is founded on the nature of the claim that the Court is being asked to entertain … [t]he outcome is not affected by the strength or weakness of that claim (see Owners of the Motor Vessel "Iran Amanat" v KMP Coastal Oil Pte Ltd [1999] HCA 11; 196 CLR 130 at [18]-[20]). 26 The Admiralty Act deals with "jurisdiction" in ss 9 to 13. In particular, the conferral and investiture of jurisdiction effected by ss 9 and 10 is by reference to actions in personam and actions in rem. Sections 9 and 10 are in the following terms: 9 Admiralty jurisdiction in personam (1) Jurisdiction is conferred on the Federal Court, the Federal Circuit and Family Court of Australia (Division 2) and on the courts of the Territories, and the courts of the States are invested with federal jurisdiction, in respect of proceedings commenced as actions in personam: (a) on a maritime claim; or (b) on a claim for damage done to a ship. (2) Subsection (1) does not confer on a court other than the Federal Court or a Supreme Court of a Territory, or invest a court of a State other than the Supreme Court of a State with, jurisdiction in respect of limitation proceedings. 10 Jurisdiction of superior courts in respect of Admiralty actions in rem Jurisdiction is conferred on the Federal Court and on the Supreme Courts of the Territories, and the Supreme Courts of the States are invested with federal jurisdiction, in respect of proceedings that may, under this Act, be commenced as actions in rem. 27 Section 14 governs the right to commence an action in rem. It provides: 14 Admiralty actions in rem to be commenced under this Act In a matter of Admiralty or maritime jurisdiction, a proceeding shall not be commenced as an action in rem against a ship or other property except as provided by this Act. 28 Section 16 of the Admiralty Act provides, relevantly: 16 Right to proceed in rem on proprietary maritime claims A proceeding on a proprietary maritime claim concerning a ship or other property may be commenced as an action in rem against the ship or property. 29 A "maritime claim" is defined in s 4(1) of the Admiralty Act as either a proprietary maritime claim or a general maritime claim. 30 The subject matter of a "proprietary maritime claim" is prescribed by s 4(2) of the Admiralty Act. The plaintiff argued that each of its claims falls within ss 4(2)(a)(i) or (ii), which relevantly provide: 4 Maritime claims … (2) A reference in this Act to a proprietary maritime claim is a reference to: (a) a claim relating to: (i) possession of a ship; (ii) title to, or ownership of, a ship or a share in a ship; … 31 Where a party seeks to invoke admiralty jurisdiction on the basis of s 4(2)(a), jurisdiction does not depend on any factual precondition, but rather, on the claim having the legal character required by that paragraph, namely "a claim relating to … possession of [or] … title to, or ownership of, a ship": Owners of the Ship "Shin Kobe Maru" v Empire Shipping Company Inc (1994) 181 CLR 404 at 426. Indeed, in Elbe Shipping South Australia v The Ship "Global Peace" [2006] FCA 954, Allsop J observed at [70]: In The Shin Kobe Maru the only "fact" that needed to be shown was the existence of a claim that bore "the legal character" of the kind referred to in s 4(2)(a)(i) and (ii) of the Act. The claim might fail for any number of reasons, but as a claim, that is as a body of assertions, it bore the legal character or answered the description of "a claim relating to possession of, or title to or ownership of a ship". 32 The legal character of a "a claim relating to possession of, or title to or ownership of a ship" is interpreted broadly. Provisions conferring jurisdiction on a superior court are to be interpreted liberally and without imposing or reading in limitations that are not found in the express words: Global Peace at [92]; The Shin Kobe Maru at 420-421. Accordingly, the words "relating to" provide for a wide relational connection between the claim and "possession of … title to, or ownership of, a ship", and should be given their ordinary meaning. Section 4(2) is wide enough to encompass a claim that a third party is or has been entitled to become the owner of the ship in question and claims concerned with equitable interests (The Shin Kobe Maru at 421, 424; Wilmington Trust Co (Trustee) v The Ship "Houston" [2016] FCA 1349 at [42]-[44]), including a claim said to arise by constructive or resulting trust (Zetta Jet Pte Ltd v The Ship "Dragon Pearl" [2018] FCAFC 99). 33 In contrast with s 4(2) of the Admiralty Act, the counterpart provision in the United Kingdom, being s 20(2) of the Senior Courts Act 1981 (UK), is clearly narrower. It provides that a claim may be brought as an action in rem against the ship or property to which the claim relates in, inter alia, the following case: "(a) any claim to the possession or ownership of a ship …". 34 The description of the claim as a "proprietary maritime claim" does not assist in construing the definition in s 4(2)(a) of the Admiralty Act. As observed by the High Court in The Shin Kobe Maru at 419: The use of the word "proprietary" in the term to be defined does not colour the meaning to be given to the definition which follows it. It would be quite circular to construe the words of a definition by reference to the term defined. The claims (i) Are the claims that The Merlion was held on trust, and for knowing receipt, proprietary maritime claims of the legal character described in s 4(2)(a)? 35 The answer to both claims is, yes, for the following reasons. 36 Mr Burrows has pleaded a series of assertions which, if established at trial, might lead to the conclusion that PMY held The Merlion on an express trust for his benefit pursuant to the terms of the Agreement. It is a claim "relating to ownership of a ship". It is uncontroversial that a claim for beneficial ownership of a ship is within jurisdiction: The Shin Kobe Maru at [37]. Barnes v Addy 37 It follows that Mr Burrows' Barnes v Addy claim, however difficult it may ultimately be to prove, is one "relating to" the possession or ownership of The Merlion. Mr Thurlow relies on the Transfer of HB580 as the basis of his title. He submitted that, although drawn in layman's language, it is a form of bill of sale. 38 Mr Thurlow did not seriously contest that this claim was within jurisdiction, except to the extent that he contended that it was necessary to examine whether the claim was "genuine". Mr Thurlow sought to draw from the decision of Allsop J in Global Peace at [133] that it was appropriate to test the 'legitimacy' of the assertions underlying Mr Burrows' claim. The passage relied upon does not assist. His Honour was there referring to the legitimacy of assertions that would bring the claim within the notion of a maritime lien recognised in Australian law as a maritime lien. As his Honour himself stated, at [75], the analysis of whether a claim has the relevant character: … must be undertaken "by reference to the nature of the plaintiff's case as put forward, without reference to … whether it is likely to succeed or not". Statements in some of the cases of the necessity to show some strength in the case before the jurisdiction of the court is attracted (that is before the court is legitimately seized of authority to adjudicate) appear impermissibly to combine the attraction of jurisdiction with its exercise. (Citations omitted.) 39 The Barnes v Addy claim is properly characterised as "relating to possession of, or title to or ownership of a ship" and it is therefore within jurisdiction. (ii) Are the claims arising out of the alleged sham, including the voidability of any transfer to Mr Thurley and from Mr Thurley to Mr Thurlow, proprietary maritime claims of the legal character described in s 4(2)(a)? 40 The answer is, yes, for the following reasons. 41 Mr Burrows pleaded that the completion of the Transfer Documents by Mr Thurley, and which identified Mr Thurley and not PMY as the purchaser of The Merlion, was a sham. 42 The notion of a "sham" was explained by Lockhart J in Sharrment Pty Ltd v Official Trustee in Bankruptcy (1988) 18 FCR 449 at 454: A "sham" is therefore, for the purposes of Australian law, something that is intended to be mistaken for something else or that is not really what it purports to be. It is a spurious imitation, a counterfeit, a disguise or a false front. It is not genuine or true, but something made in imitation of something else or made to appear to be something which it is not. It is something which is false or deceptive. 43 His Honour, at 453-454, cited a passage from Snook v London & West Riding Investments Ltd [1967] 2 QB 786 in which Diplock LJ said, referring to the "popular and pejorative word", at 802: I apprehend that, if it has any meaning in law, it means acts done or documents executed by the parties to the "sham" which are intended by them to give to third parties or to the court the appearance of creating between the parties legal rights and obligations different from the actual legal rights and obligations (if any) which the parties intend to create …whatever legal consequences flow from this, all the parties thereto must have a common intention that the acts or documents are not to create the legal rights and obligations which they give the appearance of creating. 44 Mr Burrows alleges that the completion of the Transfer Documents was done to disguise the true legal arrangements and that, being a sham, Mr Thurley had no legal or beneficial rights under those documents. It is pleaded that Mr Thurley had possession of The Merlion either for Mr Burrows or PMY on a constructive trust, and – where held for PMY – that PMY held the rights in possession for Mr Burrows by way of trust or bailment. 45 Alternatively, it is said that if the Transfer Documents were effective to give ownership rights to Mr Thurley, he held them as a bare trustee for PMY. 46 Mr Burrows seeks a declaration that he is and was, at all times, the legal and beneficial owner. 47 Mr Burrows pleaded further that the completion of the Transfer Documents in the manner described above was done with the intent of defrauding the creditors of PMY, which included Mr Burrows. 48 Accordingly, it is said that if Mr Thurley acquired ownership from Mr Burrows by operation of the Transfer Documents, that transfer was voidable pursuant to s 228 of the PLA. Any subsequent transfer from Mr Thurley to Mr Thurlow is impugned on one of two bases, being either because of the invocation of the nemo dat non habet principle, or because the transfer to Mr Thurlow also intended to defraud the creditors of PMY. 49 Section 24 of the Sale of Goods Act 1896 (Qld) (SGA) provides: Sale by person not the owner (1) Subject to the provisions of this Act, when goods are sold by a person who is not the owner thereof, and who does not sell them under the authority or with the consent of the owner, the buyer acquires no better title to the goods than the seller had, unless the owner of the goods is by the owner's conduct precluded from denying the seller's authority to sell. 50 In the present case, Mr Burrows asserts that, assuming Mr Thurlow is the purported owner of The Merlion, Mr Thurley and/or PMY could not give him good title because PMY held The Merlion on trust for Mr Burrows. This is a clear articulation of a claim "relating to title to …a ship" under s 4(2)(a)(ii). 51 It does not matter that the relief sought by Mr Burrows, pursuant to s 228 of the PLA, is to set aside the subsequent transfers as between PMY and Mr Thurley, and/or Mr Thurley and Mr Thurlow, on the basis that they occurred with the intention to defraud the creditors of PMY. A declaration that such an alienation is voidable is prefatory to the ultimate remedy sought, being restoration of his alleged full legal and beneficial ownership in The Merlion, and a declaration that he is and always has been the owner. That is sufficient to bring the claim within jurisdiction. 52 Whatever their ultimate prospects of success might be, the various claims arising from the alleged sham relate to the possession or ownership of The Merlion within the meaning of s 4(2) of the Admiralty Act. (iii) Are the claims in conversion and/or detinue proprietary maritime claims of the legal character described in s 4(2)(a)? 53 The answer in respect of both claims is, yes, for the following reasons. 54 Similarly, should Mr Burrows be able to establish the existence of a trust, the underlying assertions pleaded as the basis for his claims in conversion and detinue are, by their very nature, claims relating to possession of The Merlion and are within jurisdiction. Neither tort lies unless the plaintiff establishes that he has an immediate right to possession: Kuwait Airways v Iraqi Airways (Nos 4 and 5) [2002] 2 AC 883 at [38]; Gaba Formwork Contractors Pty Ltd v Turner Corporation Ltd (1991) 32 NSWLR 175 at 177; Bunnings Group Ltd v CHEP Australia Ltd [2011] NSWCA 342; 82 NSWLR 420 at [124]. 55 Both torts are proprietary in substance; the ordinary measure of damages being the full value of the chattel if specific restitution is not possible: Sappideen et al, Fleming's Law of Torts (11th ed, Lawbook Co, 2024) at [4.50] and [4.200]. It is not to the point that the person with the immediate right to possession may be a third party, as Mr Thurlow contended. The claims nevertheless have the legal characterisation of relating to possession of the ship: The Houston at [52]-[55]. (iv) Is the claim arising under the ACL a proprietary maritime claim of the legal character described in s 4(2)(a)? 56 The answer to this is, no, for the following reasons. 57 Mr Burrows alleges that PMY made a series of misleading or deceptive pre-contractual and contractual representations in respect of PMY's capacity to construct a vessel of the kind referred to in the Agreement, and that Mr Thurlow was knowingly concerned in such conduct. 58 Mr Burrows submitted that the ACL claim is proprietary in character because inter alia the relief sought is restoration of the possession and ownership of The Merlion which, in Mr Burrows' case and on his construction of the Agreement, constituted the Deposit under cl 2, and so must be returned to him. 59 He also claims an injunction requiring Mr Thurlow "to complete whatever documents are necessary to effect a transfer of title" of The Merlion to Mr Burrows. The injunction is framed in this way, so it is pleaded, because: Ordinarily this would involve an injunction under s.232(1)(e) and (6) of the Competition and Consumer Act 2010 requiring the transfer of title to the MERLION to the Plaintiff, however the MERLION is currently in the possession of the Admiralty Marshal. 60 There are several difficulties with Mr Burrows' plea under the ACL. First, although the words "relating to possession of, or title to or ownership of a ship" are interpreted broadly, the claim itself must still relate to the particular ship under arrest; in this case, The Merlion. This is consistent with the underlying function of the action in rem, being to enforce specified proprietary interests in a particular ship. The significance of that underlying function is illustrated by s 20 of the Admiralty Act, which provides inter alia that claims on maritime liens and proprietary maritime claims can only be brought against the particular ship to which the claim relates; sister-ship or surrogate ship arrest is not possible. 61 The ACL claim arises out of, or relates to, the Agreement. The Agreement was for the sale and purchase of the New Vessel, not The Merlion. As concerns the claim for misleading or deceptive conduct, all of the representations pleaded relate to the Agreement. The basis for the ACL claim is said to be representations as to PMY's capacity to construct the New Vessel; PMY's ability to perform the contract to construct and deliver that vessel; and an alleged failure to disclose PMY's financial difficulty. Self-evidently, these are not matters that "relate to the possession of" The Merlion. In Caravelle Investments Pty Ltd v Martaban Ltd [1999] FCA 1505; 95 FCR 85, Finklestein J was faced with the question of whether a claim to recover money paid to solicitors in trust pending negotiations to complete the purchase of a motor vessel, "Cape Don", was a proprietary maritime claim. His Honour found, at [15]: Not without a good deal of hesitation, I have come to the view that there is a reasonably direct connection between the plaintiff's claim and the ownership of the "Cape Don". In order for the plaintiff to succeed in the suit, it must establish that it did not purchase the "Cape Don". In other words it must show that it did not acquire (equitable) ownership of the ship even for an instant. To defeat the plaintiff's claim the defendants must show that a contract of sale was concluded and that the plaintiff had become the (equitable) owner of the "Cape Don". Thus, the fate of the action is dependent upon the resolution of the question whether there was a valid sale pursuant to which ownership of the ship passed to the plaintiff. That is sufficient for me to conclude that the claimed relief "relates to" the ownership of the "Cape Don". 62 In contrast to the circumstances considered in Caravelle Investments, the claimed relief sought in the present case arises from an agreement to purchase another ship. To succeed in his claim, Mr Burrows must establish that a series of representations was made to him by Mr Thurley and Mr Foster (neither of whom at that time are said to have had any proprietary interest in The Merlion) about the terms on which PMY might agree to construct the New Vessel for Mr Burrows. He must establish, pursuant to s 18 of the ACL, inter alia: that the alleged representations were misleading or deceptive, or were likely to mislead or deceive; that Mr Thurlow was knowingly concerned in those representations; and that he suffered loss and damage by reason of the representations, which includes Mr Thurley's delivery of The Merlion to Mr Thurlow in July 2023. In my view, the connection between the claims made pursuant to the ACL is not sufficiently direct to conclude that the claimed relief relates to the "ownership" of The Merlion. 63 Secondly, despite seeking an injunction requiring Mr Thurlow to "complete whatever documents are necessary to effect a transfer of title to him", Mr Burrows eschews reliance on ss 232(1)(e) or 232(6) of the ACL to seek an injunction requiring Mr Thurlow to facilitate the re-transfer of ownership in The Merlion to him. That is the only statutory remedy by which any proprietary interest in The Merlion might be restored to him. Instead, Mr Burrows pleaded: By reason of being knowingly concerned in the Pre-Contractual Conduct and also the Solvency Representation Glenn Thurlow is liable for damages under the Australian Consumer Law. 64 This is an entirely personal claim against Mr Thurlow. It is not a proprietary maritime claim. 65 Ultimately, the gravamen of Mr Burrows' claim under the ACL rests on allegations of misleading or deceptive conduct by PMY, through Mr Thurley and Mr Foster, that led to a contract being entered into between Mr Burrows and PMY – which is not a party to these proceedings and is now in liquidation – for the sale and purchase of a different ship, not The Merlion. It is not a proprietary maritime claim within s 4(2) of the Admiralty Act. 66 Mr Burrows accepts that if any of his claims do not have the character of proprietary maritime claims, then the proper course is for him to plead those claims in separate originating process, as required by r 18 of the Admiralty Rules. However, Mr Burrows contends that the Court should exercise its discretion in this case not to require him do so, on the basis that the pleading nevertheless fulfils its basic functions, despite any deficiencies. 67 In the circumstances of this case, where it is clear that there are intermingled proprietary and personal claims involving people and entities, who are not presently joined to proceedings, but would be required to be, it seems, to deal with those claims, it is appropriate that Mr Burrows be required to plead the differently characterised claims in the manner required by the Admiralty Rules. In that way, the proprietary claims can proceed against The Merlion, and – to the extent that it is established that Mr Thurlow is indeed the relevant person in respect of those claims – against him personally. SHOULD THE PLAINTIFF'S CLAIMS BE SUMMARILY DISMISSED? Legal principles regarding summary judgment 68 The principles concerning a grant of summary dismissal are well-settled and are not in dispute. 69 This Court may grant summary judgment pursuant to s 31A of the FCA Act, which relevantly provides: 31A Summary judgment (1) The Court may give judgment for one party against another in relation to the whole or any part of a proceeding if: (a) the first party is prosecuting the proceeding or that part of the proceeding; and (b) the Court is satisfied that the other party has no reasonable prospect of successfully defending the proceeding or that part of the proceeding. … (3) For the purposes of this section, a defence or a proceeding or part of a proceeding need not be: (a) hopeless; or (b) bound to fail; for it to have no reasonable prospect of success. 70 Section 31A is supplemented by r 26.01 of the Rules, by which a party may apply for summary judgment. That rule provides, relevantly: 26.01 Summary judgment (1) A party may apply to the Court for an order that judgment be given against another party because: … (e) the respondent has no reasonable prospect of successfully defending the proceeding or part of the proceeding. … If an order is made under subrule (1) dismissing part of the proceeding, (b) the proceeding may be continued for that part of the proceeding not disposed of by the order. 71 Section 31A must be applied in accordance with the statutory language, whereby summary judgment is only granted if the Court is satisfied that the party against whom the claim is brought has "no reasonable prospect" of success: Spencer v Commonwealth (2010) 241 CLR 118 at [56]-[60]). The onus is on the defendant to establish that the plaintiff's claim has no reasonable prospect of success: ASIC v Cassimatis [2013] FCA 641 at [46]-[47]. 72 The power to dismiss an action summarily is not to be exercised lightly: Spencer at [24] and [60]. However, merely because complexity exists in the underlying issues, courts should not shy away from granting summary judgment where, after considering the facts and law, the outcome of the disputation is apparent: ThoughtWare Australia Pty Limited v IonMy Pty Ltd [2023] FCA 906 at [53]. If it is clear that the outcome will not be altered by the holding of a trial, it is apposite to the proper administration of justice to require the parties to be put to the effort and expense of conducting a full hearing: ThoughtWare at [53]; Theseus Exploration NL v Foyster (1972) 126 CLR 507; FCA Act ss 37M and 37N. 73 As the assessment of the prospects of success under s 31A necessitates the making of a value judgment in the absence of a "full and complete matrix of fact and argument thereon", the judge hearing the summary judgment application has discretion: Kowalski v MMAL Staff Superannuation Fund Pty Ltd (2009) 178 FCR 401; [2009] FCAFC 117 at [28]. Therefore, when determining whether there is a reasonable prospect of success, much will depend on the case at hand, and "no hard and fast rule can be laid down as to when summary judgment is available": Polar Aviation Pty Ltd v Civil Aviation Safety Authority (No 4) (2011) 203 FCR 293 at [17]. 74 In Prior v South West Aboriginal Land and Sea Council Aboriginal Corporation [2020] FCA 808, McKerracher J set out a number of further principles relevant to the application of s 31A at [29]: (a) a reasonable prospect of success is one which is real, not fanciful or merely arguable: Rogers v Assets Loan Co Pty Ltd (2008) 250 ALR 82 per Logan J (at [41]), cited in Buurabalayji Thalanyji Aboriginal Corporation v Onslow Salt Pty Ltd (No 2) [2018] FCA 978 per McKerracher J (at [3]), though this must now be read with Spencer (at [58]-[60]); (b) there will be no prospect of success in circumstances where there is a defect in the pleadings which cannot be cured: "Sam Hawk" v Reiter Petroleum Inc (2016) 246 FCR 337 per Kenny and Besanko JJ (at [269]), cited in Buurabalayji (at [3]); (c) an application for summary dismissal is likely to succeed where the applicant's success in the principal proceedings relies upon a question of fact that can truly be described as fanciful, trifling, implausible, improbable, tenuous or one that is contradicted by all the available documents or other materials. Conversely, as a general principle, an application for summary dismissal is unlikely to succeed where, on a critical examination of all the available materials, the Court is satisfied that there appears to be a real question of fact to be determined between the parties: Australian Securities and Investments Commission v Cassimatis (2013) 220 FCR 256 per Reeves J (at [47]); (d) similarly, as a general principle, the moving party on an application for summary dismissal is likely to succeed if it is able to demonstrate to the Court that the applicant's success in the principal proceedings relies upon a question of law that is straightforward and confined, or is trite in the sense that it is well settled on authority, such that the question can be resolved summarily without the necessity for a full trial. On the other hand, the moving party would be unlikely to succeed if the Court is satisfied that the applicant's success in the proceedings relies upon a question of law that is serious or important, or is difficult and therefore likely to require lengthy argument for its resolution, or involves conflicting authority: Cassimatis (at [48]); see also: Luck v University of Southern Queensland [2008] FCA 1582 per Logan J (at [14]-[15]): s 31A is amenable to resolving straightforward questions of law; SK Foods LP v SK Foods Australia (in liq) (No 3) (2013) 214 FCR 543 per Flick J (at [115]): summary judgment may still be appropriate if a question raised is of some complexity; McAleer v University of Western Australia (No 3) (2008) 171 FCR 499 per Siopis J (at [39] and the cases therein cited): s 31A permits dismissal of a proceeding where an inquiry into the merits of the issues of law demonstrates the arguments are insufficiently strong to warrant the matter going to trial; (e) a Court should be particularly cautious about ordering summary determination where proceedings involve questions of fact and law, or mixed questions of fact and law, as these combinations usually give rise to some complexity that would require a full hearing. In such circumstances the moving party, as a general principle, would need to show a substantial absence of merit on either of the question of fact or law concerned, or on the mixed question: Cassimatis (at [49]); and (f) if a prima facie case in support of summary judgment is established, the onus shifts to the opposing party to point to some factual or evidentiary issues making a trial necessary: Jefferson Ford Pty Ltd v Ford Motor Company of Australia Ltd (2008) 167 FCR 372 per Gordon J (at [127]), cited in Buurabalayji (at [3]). See also Dandaven v Harbeth Holdings Pty Ltd [2008] FCA 955 per Gilmour J (at [6]). The claims within jurisdiction 75 I have found that the claim that The Merlion was held on trust, and the consequential claim for knowing receipt, are proprietary maritime claims. I have also found that the claims arising from the alleged sham, which give rise to the question of the voidability of certain alleged transfers of ownership of The Merlion, and the claims for conversion and detinue, are within the in rem jurisdiction. 76 Critical to his ultimate success on any of these claims is for Mr Burrows to establish that The Merlion was held on trust by either PMY or Mr Thurley. Mr Thurlow submitted that Mr Burrows has no reasonable prospects of establishing that fact because he agreed to and did in fact transfer both the legal and beneficial ownership of The Merlion to PMY by operation of the Agreement. (i) Is there a reasonable prospect of establishing The Merlion was held on trust? 77 The answer is, yes, for the following reasons. 78 The question of whether The Merlion was held on trust for Mr Burrows turns on the construction of certain provisions of the Agreement; in particular cl 2, which relates to the Deposit. 79 The ordinary principles of contract construction are clear and well-settled. A commercial contract is construed objectively by asking what a reasonable businessperson would have understood its terms to mean at the time that the contract was entered into: Electricity Generation Corporation v Woodside Energy Ltd [2014] HCA 7; 251 CLR 640 at [35]; Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451 at 461-462. This requires consideration of "the text, context (the entire text of the contract as well as any contract, document or statutory provision referred to in the text of the contract) and commercial purpose": Masters Home Improvement Pty Ltd v North East Solution Pty Ltd (2017) 372 ALR 440 at [56]; see Mount Bruce Mining v Wright Prospecting Pty Ltd [2015] HCA 37; 256 CLR 104 at [46]. 80 Where contractual language is ambiguous or susceptible of more than one meaning, evidence of events, circumstances and things external to the contract is relevant to the construction of that language. In Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337, Mason J (with whom Stephen and Wilson JJ agreed) said, at 352: … evidence of surrounding circumstances is admissible to assist in the interpretation of the contract if the language is ambiguous or susceptible of more than one meaning. But it is not admissible to contradict the language of the contract when it has a plain meaning. Generally speaking facts existing when the contract was made will not be receivable as part of the surrounding circumstances as an aid to construction, unless they were known to both parties, although, as we have seen, if the facts are notorious knowledge of them will be presumed. It is here that a difficulty arises with respect to the evidence of prior negotiations. Obviously the prior negotiations will tend to establish objective background facts which were known to both parties and the subject matter of the contract. To the extent to which they have this tendency they are admissible. But in so far as they consist of statements and actions of the parties which are reflective of their actual intentions and expectations they are not receivable. The point is that such statements and actions reveal the terms of the contract which the parties intended or hoped to make. They are superseded by, and merged in, the contract itself. The object of the parol evidence rule is to exclude them, the prior oral agreement of the parties being inadmissible in aid of construction, though admissible in an action for rectification. 81 The construction of the Agreement is not entirely straightforward. It could not be described as a meticulously prepared and comprehensive contract. Counsel for the plaintiff described it as "higgledy-piggledy". I embrace that description. It is tolerably clear that the Agreement has been drafted by lay people, who are no doubt commercially minded, but rather less concerned about legal detail and accuracy. A close reading of the terms of the Agreement tends to obfuscate, rather than illuminate, their meaning. 82 The Reference Schedule to the Agreement on pages 1-2 contains Items A-L, to which the standard terms are attached. 83 Of note, Items B and D reveal that the Broker and the Seller are the same entity, PMY. 84 Item F is in the following terms: Purchase Price - $1,8000,000.00 Deposit, engine install and ex-factory payments: Trade vessel of 2023 Clipper Hudson Bay 540-02 in lieu of payment of $1,600,000.00 Final payment at handover - $200,000.00 85 Item L(1) of the Agreement provided: Trade vessel (Clipper 2023 Hudson Bay 540-02) to be handed over after June 30,2023 and value of trade vessel being $1,600,000.00 to be credited to progress payments up to and including ex- factory payment. 86 There is no dispute that the 2023 Clipper Hudson Bay 540-02 refers to The Merlion. 87 In addition to Special Condition 1 above, Item L contained the following special conditions: … 2. Trade vessel to be surrendered at Fremantle Yacht Club, all costs to transport to Queensland to be borne by Pacific Motor Yachts. 3. New vessel to be commissioned in Queensland at The Boat Works and purchaser to be handed over vessel with orientation when complete prior to shipping to Fremantle. 4. All costs to deliver and handover vessel in Fremantle after acceptance by purchaser in Queensland to be borne by Pacific Motor Yachts. 88 The relevant parts of cl 2 of the Agreement provided: 2.1 Item G the Buyer will pay the Deposit to the Broker who will hold the Deposit in trust for the parties until a party is entitled to receive the Deposit. Within 24 hours of written acceptance by the Seller a copy of the accepted Offer to Purchase and Sales Agreement will be provided to the Buyer. … 2.3 The parties who will be entitled to the Deposit are: (a) The Seller if this Agreementsettles; (b) The Seller and the Broker on a 50 / 50 basis if this Agreement is terminated due to the Buyer's default, and (c) The Buyer less any expenses incurred, agreed or instructed by the Buyer and not paid by the Buyer at the time of the refund. (d) If this agreement is terminated due to the Seller's default the Broker will be entitled to claim from the Seller any and all costs incurred by him in relation to the sale and full commission if this Agreement has been signed as unconditional and the Seller has defaulted. (Errors in original.) 89 "Deposit" is defined in cl 1 as "the sum stated in Item G of the Reference Schedule". However, Item G was blank. 90 Clause 3.1 of the Agreement provided: On the Settlement Date, the Buyer will pay the Seller the Purchase Price less the Deposit, in exchange for: (a) Any instrument of transfer required to register or affect the transfer of title in the Vessel; (b) The Vessel's Papers in the Seller's possession; and (c) A register-able legal bill of sale to the Vessel (if the Vessel is registered on a shipping register). Delivery of the Vessel, including the gear and equipment, to theBuyer. (Errors in original.) 91 The "Settlement Date" was specified in Item K of the Reference Schedule as "Estimated December 2023". 92 Clause 13.1(h)(iv) of the Agreement warranted that "if the Seller is a company, the Seller … (iv) is otherwise unable to pay its debts as they shall fall due forpayment" (errors in original. emphasis added). The errors in this clause are obvious, but it is on the very basis of this clause that Mr Burrows makes his claim for misleading or deceptive conduct. 93 Mr Burrows has not advanced a plea for formal rectification of the Agreement, or argue the implication of a term, but rather, contends that the omission in Item G should be corrected by an exercise of construction. Mr Burrows argued that, notwithstanding the omission of Item G, the Agreement should be construed as intending to refer to The Merlion as a Deposit under the Agreement, and therefore, be subject to cl 2.1. 94 Mr Thurlow contended that the omission of Item G should be construed as evincing an intention on behalf of the parties that there would be no Deposit for the purposes of the Agreement. Instead, he argued the proper construction is that the Agreement is a trade-in contract and the transfer of The Merlion was merely an instalment of the purchase price of the New Vessel. It was submitted by Mr Thurlow that, in circumstances where The Merlion was merely part of the purchase price under the Agreement, there is no basis to conclude that it was held subject to a trust until settlement. Rather, the intentions of the parties were that Mr Burrows would divest his legal and equitable interest in The Merlion when it was transferred after 30 June 2023. That happened, he contended, by 7 July 2023 after the Transfer Documents had been signed. 95 Several textual indicators might be said to support Mr Thurlow's construction. The first is the definition of Deposit as a "sum", which connotes a sum of money. Second, cl 2.3(b) refers to the Deposit being split 50 / 50 between the Broker and the Seller in the event the Buyer defaults. It is difficult to contemplate how anything other than a sum of money could be dealt with in that way. Similarly, cl 2.3(c) permits the deduction of expenses from the Deposit by the Buyer (which I presume should read "Seller"). 96 Against that and Mr Thurlow's contention, of course, is the specific reference to "Deposit" in Item F. In accordance with ordinary principles of contract interpretation, being that language specifically inserted by the parties prevails over inconsistent standard terms dealing with the same subject matter, the better conclusion might be that The Merlion, together with the other two components mentioned in Item F to which its value was to be assigned (the "engine install" and "ex-factory payments"), was to constitute the Deposit: GEC Marconi Systems Pty Ltd v BHP Information Technology Pty Ltd [2003] FCA 50; 128 FCR 1 at [306]. 97 Mr Burrows submitted further that the stipulation in Item L(1), that the trade vessel was to be "handed over" after 30 June 2023, suggested that the parties merely intended transfer of possession, rather than ownership. It was contended that the wording of this term was consistent with The Merlion being a "Deposit" under cl 2.1, to which PMY would become entitled upon settlement, pursuant to cl 2.3(a). This was further said to be supported by the language in Special Condition L(2) that the trade vessel was to be "surrendered at Freemantle Yacht Club" (error in original). Neither the concept of a hand over, nor a surrender, necessarily connotes transfer of ownership, rather than mere possession. 98 Some assistance might be gleaned from the email dated 4 May 2023, sent by Mr Foster to Mr Burrows, exhibited to the Affidavit of Terence Roy Burrows dated 8 October 2023 (Second Burrows Affidavit). It sets out the terms of the proposal to trade in The Merlion for the New Vessel. That document appears to have been annotated with handwriting. Mr Burrows does not make any reference to the annotations. There is no evidence as to whose handwriting it is. Nevertheless, it seems possible that whoever annotated the document struck through the words that suggested ownership of The Merlion would be transferred in Fremantle. The relevant annotated part of the email reads: As for your trade boat Hudson Bay 540 Clipper would take ownership* ex Freemantle so you would not be responsible for freight back to Queensland. (Errors in original.) 99 Further, the omission of any reference in the special conditions to any relevant instrument of transfer or registrable bill of sale in relation to The Merlion supports an inference that "ownership" was not intended to be transferred at the same time that her "hand over" or "surrender" was to be completed. 100 The Agreement uses similar language of "hand over" in relation to the New Vessel. Item L(3) says that the "purchaser to be handed over vessel with orientation" prior to shipping to Fremantle" (emphasis added). Item L(4) speaks of costs to "deliver and hand over vessel in Fremantle after acceptance by purchaser in Queensland". It is tolerably clear, however, that cl 3 deals with the detail of steps necessary to effect the transfer of ownership in the vessel that is the subject of the Agreement. 101 The Transfer Documents do not take the matter of construction much further. Mr Burrows says that the forms were accessed online by him and returned fully executed, bearing Mr Thurley's signature. Mr Burrows also deposes that Mr Thurley was the sole director of PMY. Nevertheless, he deposes to having been surprised by the fact that Mr Thurley himself, rather than PMY, was identified in the forms as the purchaser. Mr Burrows deposes that he did not lodge the Forms with DOTWA, and it appears that neither did Mr Thurley. A Boat Registration Certificate issued by DOTWA, exhibited to the First Burrows Affidavit, records the registration of The Merlion as valid until 15 December 2023. It is still registered in Mr Burrows' name. Again, this does not take the matter much further. The Western Australian recreational ship register maintained by DOTWA does not create a "Torrens-type" system of title by registration. There is no evidence that The Merlion has been registered in any other state, or in any other name. 102 The construction of the Agreement is central to the dispute. On the evidence currently before the Court, Mr Burrows' claim that The Merlion was to be held on trust under cl 2.1 of the Agreement could not be described as improbable or implausible. (ii) Is there a reasonable prospect of establishing knowing receipt? 103 For Mr Burrows to establish liability on the part of Mr Thurlow, pursuant to the first limb of Barnes v Addy, he must establish that: (a) there was a trust; (b) PMY (as trustee) has misapplied "trust property"; (c) Mr Thurlow (as a third party) has received trust property; and (d) at the time of receiving the trust property, Mr Thurlow knew of the trust and of the misapplication of the trust property. See The Bell Group (in liq) v Westpac Banking Corporation (No 9) (2008) 39 WAR 1 at [4748]; Consul Developments Pty Ltd v DPC Estates Pty Ltd (1975) 132 CLR 373, 408. 104 Mr Thurlow will be taken to have "known", in the relevant sense, if he held knowledge within any of the first to fourth categories described in Baden Delvaux & Lecuit v Société Générale pour Favoriser le Développement du Commerce at de l'Industrie en France SA [1992] 4 All ER 161, 233-235, 242-43, being: (a) actual knowledge of the trust and the misapplication of trust property; or (b) deliberately shutting his eyes to those things; or (c) abstaining in a calculated way from making such enquiries as an honest and reasonable person would make, about the trust and the application of trust property; or (d) knowing of facts which to an honest and reasonable person would indicate the existence of the trust and the fact of misapplication. See Farah Constructions v Say-Dee Pty Ltd (2007) 230 CLR 89, 163–4 at [177]; Grimaldi v Chameleon Mining NL (No 2) (2012) 200 FCR 296, 362 at [262]; Mathieson Nominees v Aero Developments [2016] VSC 131 at [166]; Sino Iron Pty Ltd v Worldwide Wagering Pety Ltd (2017) 52 VR 664; [2017] VSC 101 at [330]. 105 As I consider that there is a reasonable prospect of establishing that The Merlion was trust property pursuant to the Agreement, and was held on trust by PMY for Mr Burrows, the prospects of the knowing receipt claim turn on whether: Mr Thurlow knew of the existence of the trust; and that the transfer of The Merlion from Mr Thurley to Mr Thurlow was in breach of the terms of the trust. 106 Mr Thurlow contended that he had no knowledge of the trust, and that the mere allegation of knowledge without more is insufficient for Mr Burrows' Barnes v Addy claim to have reasonable prospects of success. 107 Mr Burrows pointed to the following factors as tending to establish Mr Thurlow's knowledge: (a) Mr Thurlow's broader participation in the business of Clipper Motor Yachts as a principal; (b) Mr Thurlow being, at all times, the owner of 50% of Clipper Motor Yachts Pty Ltd, which is the company to which the revenue of PMY was diverted after June 2023, and which is the trustee of the Thurley & Thurlow Unit Trust; (c) Mr Thurlow being, at all times, closely involved in the running of PMY, and Clipper Motor Yachts broadly, having knowledge "[a]t all times" of the transactions being entered into in connection with the business; (d) in June 2023, Mr Thurlow awareness that Mr Thurley was continuing to conduct business on behalf of PMY and enter into contracts for the construction of new vessels, despite the financial circumstances of PMY; (e) the payments that Mr Burrows made for the original construction of The Merlion in 2022 were made to the bank account of Clipper Yachts Australia Pty Ltd, a company jointly owned by Mr Thurley and Mr Thurlow, and which is also the trustee of the Thurley & Thurlow Unit Trust; (f) Mr Thurlow's presence in September 2022 when The Merlion was delivered to the Fremantle Sailing Club in Western Australia by Mr Thurley; (g) Mr Thurley providing Mr Thurlow a copy of the Agreement, and Mr Thurlow's knowledge of its purported effect, granting a right to possession (and eventually ownership) of The Merlion to PMY. (h) Mr Thurlow's provision of funds to assist PMY with the construction of the New Vessel under the Agreement; (i) Mr Thurlow being a substantial creditor of PMY; and (j) Mr Thurlow was aware that, when he acquired possession of The Merlion, it was the same vessel that was constructed by PMY for Mr Burrows and had previously been delivered to him. 108 Mr Thurlow argued that there is no basis to infer from the above factors as pleaded, in ordinary course of business, that he had seen the terms of the Agreement and knew that The Merlion was held on trust. 109 Mr Burrows alleges that Mr Thurlow's receipt of a copy of the Agreement allows him to be taken to have known, or ought to have known, that The Merlion was held on trust for Mr Burrows until such time as the Agreement settled, by which time PMY would acquire ownership of The Merlion. However, although Mr Thurlow received an email from Mr Thurley which contained a copy of the Agreement, this email was dated 8 September 2023. It does not evidence that Mr Thurlow had the requisite knowledge at the time the alleged trust property was transferred to him on 25 July 2023. 110 Mr Thurlow deposes that: It was only on 8 September 2023 that I saw for the very first time a copy of Mr Burrows' contract to purchase HB 540S – Boat 2 … that was emailed to me by Mr Thurley (Burrows' contract). At the time I only read the first 2 pages of this document … For the avoidance of doubt I confirm that: (a) At the time HB 580 – Boat 1 …was transferred to me on 25 July 2023, I had not seen a copy of the Burrows' contract, nor was I aware of it. At this time I was equally completely unaware of PMY's contractual terms and conditions of its sale contracts which it entered into with its customers; (b) At the time I took possession of HB 580 – Boat 1 … in around August 2023, I had not seen a copy of the Burrows' contract, nor was I aware of it. At this time I was equally completely unaware of PMY's contractual terms and conditions of its sale contracts which it entered into with its customers; (c) Prior to the commencement of this proceeding, I was never aware that HB 580 – Boat 1 … was allegedly being held on trust for Mr Burrows, or that the transfer of this vessel to me may constitute a breach of trust by PMY. (Emphasis in original.) 111 Mr Burrows contended that none of this "is unanswerable evidence of facts fatal to the plaintiff's case". He submitted that, despite Mr Thurlow's disavowal of knowledge in the terms set out above, other paragraphs of his affidavit cast a shadow over its veracity. Mr Burrows pointed in particular to aspects of Mr Thurlow's evidence: that he previously travelled to China three or four times a year to check on the progress of boats which PMY had contracted for construction; as to his knowledge of the general practices by which customers of PMY paid for their boats; that he was, at least, significantly involved in the company that entered into the contract to build The Merlion and the New Vessel, and the inference that arises from Mr Thurlow's statement that, on being provided with the 8 September 2023 email the "transaction was confirmed to me". 112 As has already been observed, Mr Thurlow's claim to The Merlion is founded on the Transfer of HB580. In the Thurlow Affidavit, Mr Thurlow deposes to having drafted the document himself "without obtaining any legal … assistance". The Transfer of HB580 records the transfer of ownership of The Merlion from Mr Thurley to Mr Thurlow. It is therefore difficult to understand why Mr Thurlow drafted the document in those terms given that he deposes that: It was always my understanding that Mr Thurley took possession of HB-580-Boat 1 on behalf of PMY, and that after the trade in was made it belonged to PMY. I entered into the Transfer by reason of and reliance on the relevant loan agreements with PMY. 113 In the course of the hearing, his Senior Counsel indicated that Mr Thurlow was available for cross-examination. Counsel for Mr Burrows, however, did not avail himself of that opportunity. I was therefore invited to draw an appropriate inference. Whatever inference might seem obvious to draw, it is not appropriate at this stage of the proceedings and in circumstances where the Thurlow Affidavit had been filed and served only four days before the hearing and after the ASOC had been delivered. The evidence that is available has not established that the Barnes v Addy claim lacks any reasonable prospects of success. (iii) Is there a reasonable prospect of establishing the voidability of any transfer on the basis of the alleged sham? 114 The answer is, no, for the following reasons. 115 The claims arising out of the alleged sham are predicated on the significance of the Transfer Documents to the circumstances that are said to constitute the sham. In particular, it is pleaded (ASOC at [63]) that: (i) It was a term of the 2023 Agreement that the MERLION should be handed over to Pacific Motor rather than to Brett Thurley. (ii) Brett Thurley entered his own name on the two 'Notification of Change of Ownership' documents as the ostensible purchaser of the MERLION. … (iii) A The entry of Brett Thurley's name on the two 'Notification of Change of Ownership' documents was a sham with the following elements: (a) The entry of Brett Thurley's name was intended to create the appearance that Mr Thurley had purchased the MERLION and had legal title to the vessel; (b) Brett Thurley was aware that any rights to the MERLION under the 2023 Agreement were held by Pacific Motor and the Plaintiff, rather than Thurley. Thurley intended that creation of the "notification of Change of Ownership' documents would disguise the true legal arrangement. (c) The Plaintiff, by executing the two 'Notification of Change of Ownership' documents was seeking to give effect to the rights created by the 2023 Agreement and accordingly did not intend the change of ownership documents to have the effect of transferring the legal and beneficial ownership of the MERLION to Brett Thurley. (Emphasis in original.) 116 There is little doubt that, on a proper construction of the Agreement, The Merlion was to be handed over to PMY in accordance with Item L(1) of the Reference Schedule to the Agreement. It has also been observed that the Agreement was signed by Mr Thurley as the Seller. Nowhere on the Agreement does it suggest that Mr Thurley signed "for and on behalf of" PMY, although the Seller was defined in the Agreement as PMY. It is also uncontroversial that Mr Thurley was the sole director of PMY. To the extent that Mr Burrows seeks to place some emphasis on having handed over The Merlion to Mr Thurley, little can be gleaned from that circumstance. 117 In the Third Burrows Affidavit, Mr Burrows deposes to the circumstances surrounding the completion of the Transfer Documents. He says that he downloaded the forms from DOTWA website in or about late June 2023, filled in his details and signed them, and sent them by email to Mr Foster. They were returned to him "[s]ometime later" by Mr Foster, with the personal details and signature of Mr Thurley as purchaser. Mr Burrows deposes that he enquired about the correctness of the forms with Foster. He does not depose as to whether he was provided with an explanation, nor does he depose to whether he ever made enquiries of Mr Thurley. The Agreement itself did not require the Transfer Documents to be completed. More significantly, Mr Burrows deposes that he did not lodge the forms with DOTWA for two reasons: first, he understood ownership would not be transferred until late 2023; second, he regarded the forms as incorrect because they identified Mr Thurley as the purchaser. 118 If, as Mr Burrows has pleaded, the entry of Mr Thurley's name was intended to create the appearance that he, Mr Thurley, had purchased The Merlion, then that is quite possibly what the Transfer Documents could convey. It could not then be said that the documents could give to third parties the appearance that they disguised some other transaction: Sharrment at 454. The Transfer Documents do the very thing that Mr Burrows says should not have been done – they are precisely what they purport to be. For that reason alone, Mr Burrows has no real prospect of succeeding in establishing the alleged sham. 119 In the circumstances of this case, the allegation would have to be that Mr Thurley signed the documents in his own name, intending all along to become the true owner, while still being able to maintain that PMY was the owner as intended under the Agreement because he, being the sole director, had executed them on its behalf. The nonsense is obvious. In any event, even if Mr Thurley did intend to become the registered owner of The Merlion, there is no evidence to suggest that he, as the purchaser, submitted the Transfer Documents, together with the HIN Certificate, within 15 days of acquiring the vessel as is required by s 45E(2)(a) of the Navigable Waters Regulations. Indeed, the evidence is to the contrary. As at the date of the hearing of this application, The Merlion remained registered to Mr Burrows on the Western Australian register. 120 It may reasonably be inferred that Mr Burrows has remained in possession of the Transfer Documents. 121 For those reasons, it is difficult conclude that Mr Burrows has any reasonable prospects of establishing that Mr Thurley put his name on the Transfer Documents with the intention of creating the false appearance that he had purchased The Merlion. Less, still, does it seem likely that Mr Burrows would be able to establish that Mr Thurley intended the creation of the Transfer Documents to disguise a different legal arrangement. Had Mr Thurley wished to create the appearance that he himself had purchased The Merlion, it is difficult to think of any reason why he would return the documents to Mr Burrows, rather than lodge them himself. 122 Further, there is no evidence at all that Mr Thurley used, or was indeed able to use, the Transfer Documents to disguise the true legal relationship in the alleged subsequent transfer to Mr Thurlow. The Thurlow Affidavit says nothing about having seen the Transfer Documents, nor are they referred to in the Transfer Document dated 25 July 2023. There is, therefore, no evidence that Mr Thurley and Mr Thurlow "had a common intention that the acts or documents are not to create the legal rights and obligation which they give the appearance of creating" that would ground a conclusion that the entry of Mr Thurley's name on the Transfer Documents was a sham: Snook at 802. 123 In circumstances where the evidence before the Court establishes that Mr Burrows has retained the Transfer Documents and they have not been used to alter the vessel's registration in Western Australia, it is difficult to see how the Transfer Documents can be said to form the basis of the alleged sham. 124 For all these reasons, I consider that the prospects of success on the claims arising out of the alleged sham are such that they ought to be summarily dismissed. (iv) Is there a reasonable prospect of establishing liability in conversion and/or detinue? 125 The answer is, yes, for the following reasons. 126 The essential elements of the tort of conversion involve an intentional act or dealing with goods inconsistent with or repugnant to the rights of the owner, including possession and any right to possession. Such an act or dealing will amount to such an infringement of the possessory or proprietary rights of the owner if it is an intended act of dominion or assertion of rights over the goods: Bunnings Group Ltd v CHEP Australia Ltd [2011] NSWCA 342; 82 NSWLR 420 at [124]. Detinue is a separate tort from conversion and is committed when a plaintiff lawfully demands the return of goods or chattels, and the defendant wrongfully refuses to comply with such a demand: Volvo Finance Australia Pty Ltd v Waterfront Enterprises Pty Ltd (In Liq) (No 2) [2020] NSWSC 262 at [38]-[39]. Despite their separate origins, they now offer overlapping remedies: Gaba Formwork at 177. 127 The prospects of success of the claims for conversion and detinue are contingent on the outcome of the claims asserting that Mr Burrows had a right to possession of The Merlion. Establishing interference with the goods that is inconsistent with or repugnant to the rights of the owner, including possession or any right to possession, is an element of both conversion and detinue: Volvo at [33], [38]; Bunnings at [124]. 128 There is contradictory evidence before the Court as to which of PMY, Mr Thurley, Mr Thurlow, or Mr Burrows have an immediate right to possession of The Merlion. In the Thurlow Affidavit, Mr Thurlow deposes to the circumstances in which he acquired The Merlion and rejects any suggestion that he acquired it for "no consideration, or inadequate consideration". There is also conflicting evidence about the nature of any demands that were made by Mr Burrows to Mr Thurlow about the return of The Merlion to Mr Burrows. The resolution of the conflicting positions is clearly a matter that requires a trial. 129 In circumstances where the claims establishing that Mr Burrows had a right to possession of The Merlion have reasonable prospects of success, it necessarily follows that the claims in conversion and detinue have similar prospects. An equitable proprietary interest in a chattel provides sufficient title to sue in conversion and detinue: Brybay Pty Ltd (in liq) v Esanda Finance Corp Ltd [2002] WASC 309 at [18], citing Maynegrain Pty Ltd v Compafina Bank [1984] 1 NSWLR 258. If Mr Burrows has the right to possession of The Merlion, then Mr Thurlow has acted inconsistently with such a right by keeping Mr Burrows out of the use of the vessel. 130 Despite Mr Thurlow's submission that he was a bona fide purchaser for value without notice, to support that no claim in conversion or detinue lies against him, for the reasons discussed above, that submission cannot be accepted at this interlocutory stage. Having found that Mr Burrows has reasonable prospects of establishing that Mr Thurlow had knowledge of the terms of the trust, pursuant to which Mr Burrows was the equitable owner of The Merlion, I find also that he would also have reasonable grounds to argue that Mr Thurlow was not such a bona fide purchaser. 131 In any event, even if Mr Thurlow was a bona fide purchaser, that mere fact does not protect Mr Thurlow from liability for conversion or detinue. Those torts are ones of strict liability, and therefore, a mental element of knowing that a wrong is being committed is not required: Bunnings at [125]; Johnson Matthey (Aust) Ltd v Dascorp Pty Ltd [2003] VSC 291; 9 VR 171 at [151]. 132 Accordingly, I do not consider that the claims for conversion and detinue are appropriate for summary dismissal. DISPOSITION 133 Mr Thurlow has succeeded in establishing that the claim brought under the ACL is not a proprietary claim actionable in rem within the meaning of s 4(2)(a) of the Admiralty Act. It has been impermissibly commenced in the same proceedings as the in rem claims, contrary to r 18 of the Admiralty Rules. It should be struck out. Mr Thurlow has also succeeded in establishing that the claims arising out of the alleged sham have no reasonable prospects of success and ought to be summarily dismissed. 134 Further, the prayer for relief in terms that the Admiralty Marshal is to "provide the Plaintiff with possession of MERLION within fourteen (14) days" is entirely misconceived. The Merlion is not in the possession of the Marshal, rather she is in the custody of the Marshal: The Hoop (1801) 4 C Robb 145, 146. Possession remains with whoever is lawfully entitled to possession. Further, it was Mr Burrows who arrested The Merlion and thereby caused her to be in the custody of the Marshal. Should Mr Burrows wish the ship to be released from arrest, the relevant procedure is provided for in the Admiralty Rules. For those reasons, paragraphs 87A and 90(i) of the ASOC are embarrassing and should be struck out pursuant to r 16.21 of the Rules. 135 Mr Burrows has otherwise successfully resisted the attack on jurisdiction. Each of the claims relating to the existence of a trust, the consequential claim for knowing receipt, and the claims in conversion and detinue, bear the legal character of a proprietary maritime claim described in s 4(2)(a) of the Admiralty Act. Further, it has not been established that Mr Burrows has no reasonable prospects of succeeding in those claims at trial. The degree of confidence with which this conclusion can be reached varies across the various causes of action. However, on the material available, it cannot be said that any of them warrant their summary dismissal. To that extent, the interlocutory application filed 28 November 2023 must be dismissed. 136 Each of the parties has had some success. For that reason, each should bear its own costs of the proceedings. 137 The parties have liberty to apply within 7 days of the date of the orders. I certify that the preceding one hundred and thirty-seven (137) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Sarah C Derrington. Associate: Dated: 13 March 2024